Overwhelming debt a problem for all economic demographics

On behalf of Motin Law Office, P.A. posted in Personal Bankruptcy on Wednesday, January 29, 2014.

Bankruptcy is not only a problem faced by the destitute. In fact, many people living on comfortable middle-class incomes right here in Saint Cloud are faced with the painful decision to file for bankruptcy when their money problems consume them. Neither are the very rich immune from individual bankruptcy filings, though the quantity of their debts and assets may be proportionally larger than those held by individuals of other economic strata.

Former NFL quarterback Vince Young recently filed for bankruptcy when his liabilities greatly exceeded his assets. Young's advisors believe that while his debts may reach upwards of $10 million, his assets could be as small as $500,000. As a result of amassing such overwhelming debt, Young chose to file for chapter 11 bankruptcy.

Chapter 11 bankruptcy is unique to both chapter 7 and chapter 13 bankruptcies, which are both more common for individual bankruptcy filings. Chapter 11 allows a debtor, usually a business or other non-consumer entity, to keep creditors from imposing liens or other garnishments while the debtor develops a plan to make money. In Young's case, he and his advisors are hoping that he is picked up by another NFL team in the off season. Young apparently made over $30 million as a professional player over a six year period.

It is likely that Young did not expect to be out of the NFL so early in his career though like everyday men and women even the very rich must be prepared to deal with unexpected life changes. As he and his financial advisors work through this unusual form of individual bankruptcy, it will be interesting to see how the courts accept his plan for profitability.

Source: Los Angeles Times, "Vince Young files for bankruptcy protection," Chuck Shilken, Jan. 23, 2014